U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10-KSB

                     Annual report under Section 13 of the
                        Securities Exchange Act of 1934

                  For the fiscal year ended DECEMBER 31, 1997

                          Commission File No.: 0-28162

                              LENOX BANCORP, INC.
                 (Name of small business issuer in its charter)

         OHIO                                           31-1445959
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                   5255 BEECH STREET, ST. BERNARD, OHIO 45217
                    (Address of principal executive offices)

                   Issuer's telephone number: (513) 242-6900
      Securities registered under Section 12(b) of the Exchange Act:  NONE
         Securities registered under Section 12(g) of the Exchange Act:

                           COMMON STOCK, NO PAR VALUE
                                (Title of class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes   X    No       .
    -----     -----

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         State issuer's revenues for its most recent fiscal year: $195,000

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days: $7,068,234 as of
March 23, 1998.

         As of March 23, 1998, the issuer has 404,413 shares outstanding
(excluding treasury shares).

                      DOCUMENTS INCORPORATED BY REFERENCE

         PORTIONS OF THE ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED
DECEMBER 31, 1997 ARE INCORPORATED BY REFERENCE INTO PART II OF THIS FORM
10-KSB.

         PORTIONS OF THE PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
ARE INCORPORATED BY REFERENCE INTO PART III OF THIS FORM 10-KSB.


<PAGE>



                                     INDEX

PART I                                                                      PAGE

Item 1.      Description of Business .....................................    1
             Additional Item.  Executive Officers of Registrant

Item 2.      Description of Properties....................................   34

Item 3.      Legal Proceedings............................................   34

Item 4.      Submission of Matters to a Vote of Security Holders..........   34


PART II

Item 5.      Market for Registrant's Common Equity and Related
             Stockholder Matters..........................................   35

Item 6.      Management's Discussion and Analysis or Plan
             of Operations................................................   35

Item 7.      Financial Statements.........................................   35

Item 8.      Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure.......................   35

PART III

Item 9.      Directors, Executive Officers, Promoters and Control Person;
             Compliance with Section 16(a) of the Exchange Act............   36


Item 10.     Executive Compensation.......................................   36

Item 11.     Security Ownership of Certain Beneficial Owners
             and Management...............................................   36

Item 12.     Certain Relationships and Related Transactions...............   36

PART IV

Item 13.     Exhibits and Reports on Form 8-K.............................   37

SIGNATURES................................................................


<PAGE>



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

GENERAL

         Lenox Bancorp, Inc. (also referred to as the "Company") was
incorporated under Ohio law on July 24, 1995. On July 17, 1996, the Registrant
acquired Lenox Savings Bank (the "Bank" or "Lenox") as a part of the Bank's
conversion from a mutual to a stock Ohio chartered savings bank. The Registrant
is a savings and loan holding company and is subject to regulation by the Office
of Thrift Supervision (the "OTS"), the Federal Deposit Insurance Corporation
(the "FDIC") and the Securities and Exchange Commission (the "SEC"). Currently,
the Registrant does not transact any material business other than through the
Bank. The Registrant retained 50% of the net conversion proceeds amounting to
$1.89 million which it used to purchase investment securities and fund loan
demand. At December 31, 1997, the Company had total assets of $51.5 million and
stockholders' equity of $7.0 million (13.5% of total assets).

         The Bank was originally chartered in 1887 as an Ohio building and loan
company for the primary purpose of serving the financial needs of the employees
of Procter & Gamble. The Bank later converted to an Ohio savings and loan
company and in November 1993, converted to an Ohio savings bank under its
current name. The Bank conducts its business from its main office located in St.
Bernard, Ohio and a branch office located at 3521 Erie Avenue, Cincinnati, Ohio
45208.

         The Bank is primarily engaged in attracting deposits from the general
public in its primary market area and investing such deposits and other
available funds in mortgage loans secured by one- to four-family residences. At
December 31, 1997, the Bank had invested $35.4 million, or 90.7%, of its total
loan portfolio in one- to four-family mortgage loans. The Bank also invests in
consumer loans. Due to the close ties that have existed between the Bank and
Procter & Gamble, the Bank has a high concentration of borrowers and depositors
who are Procter & Gamble employees. The Bank has hired a mortgage loan
originator to help it attract borrowers and has also begun to market its
products and services more aggressively throughout its primary market area. In
times of low mortgage demand, the Bank has sought to invest available funds in
short-term investment securities including U.S. Government and Agency
securities.

MARKET AREA AND COMPETITION

         The Bank primarily originates one- to four-family residential mortgage
loans within its primary market area. The Bank's deposit gathering and lending
markets are concentrated in Hamilton County, Ohio, however, the Bank also offers
loans in Warren, Butler and Clermont counties, Ohio and Boone, Campbell and
Kenton counties, Kentucky. The Bank's high concentration of lending to and
deposit gathering from Procter & Gamble employees has resulted in the Bank
directly competing with institutions throughout the Cincinnati area, and most
recently directly with a Cincinnati commercial bank that has opened branch
offices at Procter & Gamble facilities.

         The Cincinnati area, which includes Hamilton County, has a stable
economic base supported by a variety of industries and employment sectors.
Cincinnati is the second largest metropolitan area in the state of Ohio.
Although Cincinnati's economy was founded on manufacturing, which remained the
dominant employment sector throughout much of the twentieth century,
manufacturing industries now trail services and wholesale and retail trade in
terms of employment. Following the national trend, service industries were the
fastest growing employment sector through the 1980s and are now the largest
employment sector in the

                                       1

<PAGE>



Cincinnati metropolitan area, led by health, business, and legal services. The
second largest employment sector is the wholesale and retail trade sector.
Although less prominent, manufacturing remains a large employment sector,
providing employment in such industries as transportation equipment, food
products, industrial machinery and chemicals.

         Cincinnati is the chosen headquarters for many Fortune 500 companies,
including Procter & Gamble, E.W. Scripps, Federated Department Stores and
Cincinnati Milacron. Many other companies among the Fortune 500 have also
established operations in Cincinnati, including Ford Motor Corp. and General
Electric. Overall, Cincinnati's popularity among large employers has served to
increase the size and stability of the Cincinnati economy.

         The Cincinnati area's increasingly diverse economic mix provides the
metropolitan area with a strong degree of economic stability, which has served
to lessen the impact the national recession has had on the Cincinnati area.
Employment increases in the service and wholesale/retail trade industries,
coupled with less dependence on manufacturing employment has further insulated
the economy from recessionary trends. Hamilton County, the location of
Cincinnati, has benefitted the most from this economic diversification as
evidenced by its lower rate of unemployment relative to Ohio and U.S. averages.

         The Bank faces significant competition both in making loans and in
attracting deposits. The Bank's competitors are the financial institutions
operating in its primary market area, many of which are significantly larger and
have greater financial resources than the Bank. The Bank's competition for loans
comes principally from commercial banks, savings and loan associations, mortgage
banking companies, credit unions and insurance companies. Its most direct
competition for deposits has historically come from savings and loan
associations and commercial banks. The Cincinnati area is the home to many
commercial banks and savings institutions. As of December 31, 1997, the Bank
estimates that it represented less than 1% of the total assets and market share
for loans and deposits, among financial institutions serving the Cincinnati
area. In addition, the Bank faces increasing competition for deposits from
non-bank institutions such as brokerage firms and insurance companies in such
areas as short-term money market funds, corporate and government securities
funds, mutual funds and annuities. Competition may also increase as a result of
the lifting of restrictions on the interstate operations of financial
institutions.

LENDING ACTIVITIES

         GENERAL. Historically, the principal lending activity of the Bank has
been the origination of long-term fixed-rate and adjustable rate one- to
four-family mortgage loans. To a lesser extent, the Bank originates consumer
loans. At December 31, 1997, the Bank had invested $36.2 million, or 92.9% of
its total loan portfolio in one- to four-family mortgage loans. The Bank has
hired a mortgage loan originator to help it attract borrowers and has also begun
to market its products and services more aggressively throughout its primary
market area. As of December 31, 1997, the Bank exceeded all regulatory capital
requirements.

         LOAN PORTFOLIO COMPOSITION. The Bank's loan portfolio consists
primarily of one- to four-family loans. The types of loans that the Bank may
originate are subject to federal and state law and regulations. Interest rates
charged by the Bank on loans are affected by the demand for such loans and the
supply of money available for lending purposes and the rates offered by
competitors. These factors are, in turn, affected by, among other things,
economic conditions, monetary policies of the federal government, including the
Federal Reserve Board and legislative tax policies.

                                       2

<PAGE>



         The following table sets forth the composition of the Bank's loan
portfolio in dollar amounts and in percentages of the respective portfolios at
the dates indicated.

<TABLE>
<CAPTION>
                                                                              AT DECEMBER 31,
                                               ---------------------------------------------------------------------------------
                                                         1997                       1996                        1995
                                               -------------------------  ------------------------------------------------------
                                                               PERCENT                    PERCENT                    PERCENT
                                                 AMOUNT       OF TOTAL       AMOUNT       OF TOTAL      AMOUNT       OF TOTAL
                                               -----------   -----------  ------------   -----------  -----------  -------------
                                                                          (DOLLARS IN THOUSANDS)
<S><C>
REAL ESTATE LOANS:
   One- to four-family(1)...................     $35,855         91.93%      $35,124        93.68%      $30,633         91.76%
   Multi-family.............................         798          2.05            --           --            --            --
   Construction(2)..........................         521          1.34           120         0.32            53           .16
                                                 -------         -----       -------        -----      --------        ------
      Total real estate loans...............     $37,174         95.32        35,244        94.00        30,686         91.92

OTHER LOANS:
   Consumer loans(3)........................       2,092          5.36         2,399         6.39         2,817          8.44
                                                  ------        ------       -------       ------       -------        ------
      Total loans...........................      39,266        100.68        37,643       100.39        33,503        100.36
                                                  ------                      ------                     ------

LESS:
   Deferred loan fees.......................          53          0.14            42         0.11            43           .13
   Loans in process.........................         145          0.37            48         0.13            16           .05
   Allowance for loan losses................          66          0.17            58         0.15            60           .18
                                                 -------        ------      --------       ------      --------        ------
   Total reductions.........................         264           .68           148         0.39           119           .36
                                                 -------        ------       -------       ------       -------        ------
TOTAL LOANS RECEIVABLE, NET.................     $39,002        100.00%      $37,495       100.00%      $33,384        100.00%
                                                 =======        ======       =======       ======       =======        ======
</TABLE>

<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31,
                                               -------------------------------------------------------
                                                          1994                         1993
                                               -------------------------------------------------------
                                                                PERCENT                     PERCENT
                                                  AMOUNT       OF TOTAL       AMOUNT        OF TOTAL
                                               ------------   -------------------------   ------------

<S><C>
REAL ESTATE LOANS:
   One- to four-family(1)...................      $29,265         92.60%      $26,112          92.58%
   Multi-family.............................           --            --            --             --
   Construction(2)..........................           --            --           107            .38
                                                  -------        ------       -------         ------
      Total real estate loans...............       29,265         92.60        26,219          92.96

OTHER LOANS:
   Consumer loans(3)........................        2,465          7.80         2,213           7.85
                                                  -------        ------       -------         ------
      Total loans...........................       31,730        100.40        28,432         100.81
                                                   ------                      ------

LESS:
   Deferred loan fees.......................           59           .19            80            .29
   Loans in process.........................           --            --            82            .29
   Allowance for loan losses................           66           .21            66            .23
                                                ---------        ------     ---------         ------
   Total reductions.........................          125           .40           228            .81
                                                 --------        ------      --------         ------
TOTAL LOANS RECEIVABLE, NET.................      $31,605        100.00%      $28,204         100.00%
                                                  =======        ======       =======         ======
</TABLE>

---------------------------
(1)   Includes second mortgage loans and home equity lines of credit on
      residential one- to four-family properties.
(2)   Construction loans are originated for the construction of residential one-
      to four-family homes.  The Bank approves the borrowers for the end loan
      financing on all construction loans it originates.
(3)   Includes loans secured by automobiles, boats, common stock, savings
      accounts and unsecured loans.

                                       3

<PAGE>



         LOAN MATURITY. The following table shows the maturity of the Bank's
loans at December 31, 1997. The table does not include principal repayments.
Principal repayments totaled $8.2 million, $7.3 million and $6.5 million for the
years ended December 31, 1997, 1996 and 1995, respectively. At December 31,
1997, all loans held by the Bank were classified as held to maturity. The table
does not include the effect of future loan prepayment activity. While the Bank
cannot project future loan prepayment activity, the Bank anticipates that in
periods of stable interest rates, prepayment activity would be lower than
prepayment activity experienced in periods of declining interest rates. In
general, the Bank originates adjustable and fixed-rate one- to four-family loans
with maturities from 15 to 30 years, one- to four-family loans with balloon
features which mature from 5 to 7 years and consumer loans with maturities of up
to 5 years.

<TABLE>
<CAPTION>
                                                                        AT DECEMBER 31, 1997
                                                    ---------------------------------------------------------------
                                                       ONE- TO
                                                        FOUR-           MULTI-                        TOTAL LOANS
                                                      FAMILY(1)         FAMILY       CONSUMER(2)       RECEIVABLE
                                                    --------------   ------------   --------------   --------------
                                                                           (IN THOUSANDS)
<S><C>
Amounts due:
  One year or less...............................      $  116          $  --          $   134           $  250
  After one year:
     More than one year to three years...........         703             --            1,119            1,822
     More than three years to five years.........       2,362             --              725            3,087
     More than five years to ten years...........       4,411             --               14            4,425
     More than 10 years to twenty years..........       9,500            798               --           10,298
     More than twenty years......................      19,284             --              100           19,384
                                                       ------          -----            -----           ------
       Total due after December 31, 1998.........      36,260            798            1,958           39,016
                                                       ------          -----            -----           ------
       Total amount due..........................      36,376            798            2,092           39,266
                                                       ------          -----            -----           ------
  Less:
     Undisbursed loan funds......................                                                           53
     Deferred loan fees, net.....................                                                          145
     Allowance for loan losses...................                                                           66
                                                                                                       -------
           Total loans, net......................                                                      $39,002
                                                                                                       =======
</TABLE>

-----------------------------
(1)   Includes second mortgage loans on residential one- to four-family
      properties and construction loans originated to fund the construction of
      residential one- to four-family mortgage loans.
(2)   Includes loans secured by automobiles, boats, common stock, savings
      accounts and unsecured loans.

                                       4

<PAGE>



         The following table sets forth at December 31, 1997, the dollar amount
of gross loans receivable, contractually due after December 31, 1998, and
whether such loans have fixed interest rates or adjustable interest rates.

<TABLE>
<CAPTION>
                                                          Due After December 31, 1998
                                       -----------------------------------------------------------------
                                              Fixed                Adjustable               Total
                                       --------------------   --------------------   -------------------
                                                                (In thousands)
<S><C>
One- to four-family.................         $20,740                $15,520                $36,260
Multi-family........................              --                    798                    798
Consumer............................           1,858                    100                  1,958
                                             -------                -------                -------
   Total loans......................         $22,598                $16,418                $39,016
                                             =======                =======                =======
</TABLE>

         LOAN ORIGINATIONS.  The following table sets forth the Bank's loan
originations, purchases, sales and principal repayment information for the
periods indicated:

<TABLE>
<CAPTION>
                                                       For the Year Ended December 31,
                                                 -----------------------------------------
                                                    1997           1996           1995
                                                 -----------   ------------   ------------
                                                              (In thousands)
<S><C>
Gross loans:
Loans receivable, beginning of period..........      $37,553        $33,444        $31,671
Loans originated:
    One- to four-family(1).....................        7,524          9,278          6,201
    Consumer(2)................................        1,360          1,311          2,096
Loans purchased................................          798            884             --
Principal repayments...........................       (8,156)        (7,365)        (6,524)
Other changes, net.............................          (11)             1             --
                                                     -------        -------        -------
    Increase (decrease) in loans receivable....        1,515          4,109          1,773
                                                     -------        -------        -------
Loans receivable, end of period................      $39,068        $37,553        $33,444
                                                     =======        =======        =======
</TABLE>

---------------------
(1)   Includes second mortgage loans and construction loans on residential one-
      to four- family properties.
(2)   Includes loans secured by automobiles, boats, common stock, savings
      accounts and unsecured loans.


                                       5

<PAGE>



         ONE- TO FOUR-FAMILY MORTGAGE LENDING. The Bank offers both fixed-rate
and adjustable-rate mortgage loans secured by one- to four-family residences,
primarily owner-occupied, located in the Bank's primary market area, with
maturities up to thirty years. Substantially all of such loans are secured by
property located in Hamilton County, Ohio.

         At December 31, 1997, the Bank's total loans, net outstanding were
$39.0 million, of which $36.4 million or 93.27% of the Bank's total loan
portfolio were one- to four-family residential mortgage loans. Of the one- to
four-family residential mortgage loans outstanding at that date, 57.4% were
fixed-rate loans, and 42.7% were ARM loans. Currently, the interest rate for the
Bank's ARM loans are tied to the one and three year Constant Maturity Index
("CMI"). However, in the past, the Bank's index was based upon the monthly
national median cost of funds as reported by the OTS, which lags behind CMI and
the one year U.S. Treasury index and which results in those loans repricing at
interest rates that may be higher or lower than the prevailing market rates.
Approximately $5.9 million of the Bank's ARM loans, or 36.4% of the Bank's total
ARM loans, are based on that index, which adversely affects the Bank's results
of operations in an increasing rate environment because loans may be repricing
at a rate that is slower than the Bank's cost of funds. In addition,
approximately $3.2 million of the loans tied to the lagging market index bear
margins as little as 50 basis points above the lagging market index. The Bank
does not intend to offer one- to four-family ARM loans based on a lagging index
in the future and has standardized the margin it uses, which is currently at
least 2.75%. The Bank currently offers a number of adjustable-rate mortgage loan
programs with interest rates which adjust either annually or every 3-year
period. Such interest rate adjustments are limited to a 2% annual adjustment cap
and a 5% and 6% life-of-the-loan cap for the Bank's 15 year ARMs and 30 year
ARMs, respectively. The Bank also offers mortgage loans with balloon features.
In general, these loans may be refinanced on the balloon date if the customer
completes a new loan application and meets all of the underwriting criteria
required of new customers. The Bank currently has no mortgage loans that are
subject to negative amortization. Finally, the Bank offers a limited amount of
construction loans for the construction of one- to four-family homes that will
serve as the primary residence of the borrower. These loans are only made,
however, when the Bank will provide the end loan financing.

         The origination of adjustable-rate residential mortgage loans, as
opposed to fixed-rate residential mortgage loans, helps reduce the Bank's
exposure to increases in interest rates. However, adjustable-rate loans
generally pose credit risks not inherent in fixed-rate loans, primarily because
as interest rates rise, the underlying payments of the borrower rise, thereby
increasing the potential for default. At the same time, the marketability of the
underlying property may be adversely affected. Periodic and lifetime caps on
adjustable-rate mortgage loans help to reduce these risks but also limit the
interest rate sensitivity of such loans.

         The Bank's policy is to originate one- to four-family residential
mortgage loans in amounts up to 80% of the lower of the appraised value or the
selling price of the property securing the loan and up to 95% of the appraised
value or selling price if private mortgage insurance is obtained. Mortgage loans
originated by the Bank generally include due-on-sale clauses which provide the
Bank with the contractual right to deem the loan immediately due and payable in
the event the borrower transfers ownership of the property without the Bank's
consent. Due-on-sale clauses are an important means of adjusting the rates on
the Bank's fixed-rate mortgage loan portfolio and the Bank has generally
exercised its rights under these clauses.

         The Bank also offers second mortgage loans based upon a lagging market
index, the monthly national median cost of funds as reported by the OTS. The
second mortgage loans are originated as fixed rate loans for the first five
years and thereafter adjust on an annual basis. At December 31, 1997, the Bank
had second mortgage loans totalling $497,000.

                                       6

<PAGE>



         CONSUMER LENDING. The Bank's portfolio of consumer loans consists of a
combination of automobile, boat and common stock and savings secured loans. The
Bank also offers unsecured loans up to $5,000 for a maximum three year term. As
of December 31, 1997, consumer loans amounted to $2.1 million or 5.36% of the
Bank's total loan portfolio. Consumer loans are generally originated in the
Bank's primary market area and generally have maturities of one to five years.
The consumer loans secured by common stock are originated with terms up to five
years and the loan amounts are limited to 80% of the value of the common stock
securing the loan. The Bank reviews the loans secured by common stock on a
monthly basis and requires that borrowers pledge additional collateral in the
event fluctuations in the market value of the pledged common stock results in
the value of the collateral dropping below the required loan to value ratio of
80%.

         Consumer loans are shorter term and generally contain higher interest
rates than residential mortgage loans. Management believes the consumer loan
market has been helpful in improving its spread between average loan yield and
costs of funds and at the same time improved the matching of its rate sensitive
assets and liabilities.

         The underwriting standards employed by the Bank for consumer loans
include a determination of the applicant's credit history and an assessment of
the applicant's ability to meet existing obligations and payments on the
proposed loan. The stability of the applicant's monthly income may be determined
by verification of gross monthly income from primary employment, and
additionally from any verifiable secondary income. Creditworthiness of the
applicant is of primary consideration; however, the underwriting process also
includes a comparison of the value of the collateral in relation to the proposed
loan amount.

         Consumer loans entail greater risks than one- to four-family
residential mortgage loans, particularly consumer loans that are secured by
rapidly depreciable assets such as automobiles or that are unsecured. In such
cases, repossessed collateral for a defaulted loan may not provide an adequate
source of repayment of the outstanding loan balance, since there is a greater
likelihood of damage, loss or depreciation of the underlying collateral.
Further, consumer loan collections are dependent on the borrower's continuing
financial stability, and therefore are more likely to be adversely affected by
job loss, divorce, illness or personal bankruptcy. Finally, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount which can be recovered on such loans in
the event of a default. At December 31, 1997, the Bank had 8 consumer loans
totalling $22,000 that were 90 days or more delinquent.

         LOAN APPROVAL PROCEDURES AND AUTHORITY. The Board of Directors
authorizes the lending activity of the Bank, establishes the lending policies of
the Bank and reviews properties offered as security. Consumer loans conforming
to the Bank's loan policy may be approved by the President, the Chief Operating
Officer or the lending operations supervisor. All other loans in amounts up to
$200,000 may be approved by two of the Bank's executive officers. Loans over
$200,000 must be approved by the Board of Directors.

         For all loans originated by the Bank, upon receipt of a completed loan
application from a prospective borrower, a credit report is ordered and certain
other information is verified by an independent credit agency. If necessary,
additional financial information may be required. An appraisal of real estate
intended to secure a proposed loan generally is required to be performed by an
appraiser designated and approved by the Bank. For proposed mortgage loans, the
Board annually approves independent appraisers used by the Bank and approves the
Bank's appraisal policy. The Bank's policy is to obtain title and hazard
insurance on all mortgage loans.


                                       7

<PAGE>



         DELINQUENCIES AND CLASSIFIED ASSETS. Management and the Board of
Directors perform a monthly review of all delinquent loans. The procedures taken
by the Bank with respect to delinquencies vary depending on the nature of the
loan and period of delinquency. The Bank generally requires that delinquent
mortgage loans be reviewed and that a written late charge notice be mailed no
later than the 15th day of delinquency. The Bank's policies provide that
telephone contact will be attempted to ascertain the reasons for delinquency and
the prospects of repayment. When contact is made with the borrower at any time
prior to foreclosure, the Bank will attempt to obtain full payment or work out a
repayment schedule with the borrower to avoid foreclosure. It is the Bank's
policy to place all loans that are delinquent by three or more payments on
non-accrual status, resulting in the Bank no longer accruing interest on such
loans and reversing any interest previously accrued but not collected. A
non-accrual loan may be restored to accrual status when delinquent principal and
interest payments are brought current and future monthly principal and interest
payments are expected to be collected. Property acquired by the Bank as a result
of foreclosure on a mortgage loan is classified as "real estate owned" and is
recorded at the lower of the unpaid principal balance or fair value less costs
to sell at the date of acquisition and thereafter. Upon foreclosure, the Bank
generally would require an appraisal of the property and, thereafter, appraisals
of the property on an annual basis and external inspections on at least a
quarterly basis.

         The Bank's Classification of Assets Policy requires that the Bank
utilize an internal asset classification system as a means of reporting problem
and potential problem assets. The Bank currently classifies problem and
potential problem assets as "Substandard," "Doubtful" or "Loss" assets. An asset
is considered Substandard if it is inadequately protected by the current net
worth and paying capacity of the obligor or of the collateral pledged, if any.
Substandard assets include those characterized by the distinct possibility that
the insured institution will sustain "some loss" if the deficiencies are not
corrected. Assets classified as Doubtful have all of the weaknesses inherent in
those classified Substandard with the added characteristic that the weaknesses
present make collection or liquidation in full, on the basis of currently
existing facts, conditions and values, highly questionable and improbable.
Assets classified as Loss are those considered uncollectible and of such little
value that their continuance as assets without the establishment of a specific
loss reserve is not warranted. Assets which do not currently expose the insured
institution to sufficient risk to warrant classification in one of the
aforementioned categories but possess weaknesses are required to be designated
"Special Mention."

         When an insured institution classifies one or more assets, or portions
thereof, as Substandard or Doubtful, it is required to establish a general
valuation allowance for loan losses in an amount deemed prudent by management.
General valuation allowances, which is a regulatory term, represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
one or more assets, or portions thereof, as Loss, it is required either to
establish a specific allowance for losses equal to 100% of the amount of the
asset so classified or to charge off such amount.

         The FDIC, in conjunction with the other federal banking agencies, has
adopted an interagency policy statement on the allowance for loan and lease
losses. The policy statement provides guidance for financial institutions on
both the responsibilities of management for the assessment and establishment of
adequate allowances and guidance for banking agency examiners to use in
determining the adequacy of general valuation guidelines. Generally, the policy
statement recommends that institutions have effective systems and controls to
identify, monitor and address asset quality problems; that management has
analyzed all significant factors that affect the collectibility of the portfolio
in a reasonable manner; and that management has established acceptable allowance
evaluation processes that meet the objectives set forth in the policy

                                       8

<PAGE>



statement. As a result of the declines in local and regional real estate market
values and the significant losses experienced by many financial institutions,
there has been a greater level of scrutiny by regulatory authorities of the loan
portfolios of financial institutions undertaken as part of the examination of
institutions by the FDIC. While the Bank believes that it has established an
adequate allowance for loan losses, there can be no assurance that regulators,
in reviewing the Bank's loan portfolio, will not request the Bank to materially
increase at that time its allowance for loan losses, thereby negatively
affecting the Bank's financial condition and earnings at that time. Although
management believes that adequate specific and general loan loss allowances have
been established, actual losses are dependent upon future events and, as such,
further additions to the level of specific and general loan loss allowances may
become necessary.

         The President of the Bank reviews the Bank's loans on a monthly basis
and classifies loans on a quarterly basis and reports the results of her review
to the Board of Directors. The Bank classifies loans in accordance with the
management guidelines described above. At December 31, 1997, the Bank had no
real estate owned as a result of foreclosure ("REO"). At December 31, 1997, the
Bank had $160,000 of assets classified as Special Mention, $71,000 of assets
classified as Substandard, and $2,000 classified as Doubtful or Loss.


                                       9

<PAGE>



         The following table sets forth delinquencies in the Bank's loan
portfolio as of the dates indicated:

<TABLE>
<CAPTION>
                                                              At December 31, 1997                         At December 31, 1996
                                             -------------------------------------------------------    --------------------------
                                                     60-89 Days                 90 Days or More                60-89 Days
                                             ---------------------------   -------------------------    -------------------------
                                                              Principal                   Principal                   Principal
                                                Number         Balance       Number        Balance       Number        Balance
                                               of Loans       of Loans      of Loans      of Loans      of Loans       of Loans
                                             ------------    -----------   -----------   -----------    ---------    ------------
                                                                             (Dollars in thousands)
<S><C>
One- to four-family.......................         1            $52             4          $152            2             $90
Consumer..................................         6             18             8            22            6              25
                                                 ---           ----           ---        ------          ---             ---
         Total............................         7            $70            12          $174            8            $115
                                                 ===            ===           ===          ====          ===            ====

Delinquent loans to total gross loans.....                     .18%                        .44%                        0.31%
</TABLE>


<TABLE>
<CAPTION>
                                               At December 31, 1996
                                             ------------------------
                                                 90 Days or More
                                             ------------------------
                                                           Principal
                                               Number       Balance
                                              of Loans     of Loans
                                             ----------   -----------
                                              (Dollars in thousands)
<S><C>
One- to four-family.......................       3           $95
Consumer..................................       8            14
                                                --           ---
         Total............................      11          $109
                                                ==          ====

Delinquent loans to total gross loans.....                 0.29%
</TABLE>

<TABLE>
<CAPTION>
                                                              At December 31, 1995
                                             -------------------------------------------------------
                                                     60-89 Days                 90 Days or More
                                             ---------------------------   -------------------------
                                                              Principal                   Principal
                                                Number         Balance       Number        Balance
                                               of Loans       of Loans      of Loans      of Loans
                                             ------------    -----------   -----------   -----------
                                                             (Dollars in thousands)
<S><C>
One- to four-family.......................         4           $116             2          $ 66
Consumer..................................        10             20            11            23
                                                  --            ---            --           ---
         Total............................        14           $136            13           $89
                                                  ==           ====            ==           ===

Delinquent loans to total gross loans.....                     .41%                        .27%
</TABLE>


                                       10

<PAGE>



         NON-ACCRUAL AND PAST-DUE LOANS. The following table sets forth
information regarding loans contractually past due 90 days or more. At such
date, there were no accruing loans past due 90 days or more. If all non-accrual
loans had been performing in accordance with their original term and had been
outstanding from the earlier of the beginning of the period or origination, the
Bank would have interest income of $8,647, $3,303, $3,146, $7,470, and $5,008
for the years ended December 31, 1997, 1996, 1995, 1994 and 1993, respectively.
The Bank had no troubled debt restructurings within the meaning of SFAS No. 15
at any of the dates indicated.

<TABLE>
<CAPTION>
                                                                             At December 31,
                                              -----------------------------------------------------------------------------
                                                  1997            1996            1995             1994            1993
                                              -------------    -----------    ------------     ------------    ------------
                                                                          (Dollars in thousands)
<S><C>
Non-accrual one- to four-family loans
  delinquent 90 days or more............          $152          $  95             $66              $88            $109
Non-accrual consumer loans
  delinquent 90 days or more............            22             14              23                5               1
                                                  ----           ----             ---              ---            ----
Total non-performing loans..............           174            109              89               93             110
Total investment in REO.................            --             --              --               --              --
                                                  ----           ----             ---              ---            ----
    Total non-performing assets.........          $174           $109             $89              $93            $110
                                                  ====           ====             ===              ===            ====
Non-performing loans to total loans.....           .45%           .29%            .27%             .29%            .39%
Non-performing assets to total assets...           .34            .23             .31              .23             .26
</TABLE>

         ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is established
through a provision for loan losses based on management's evaluation of the
risks inherent in its loan portfolio and the general economy. The allowance for
loan losses is maintained at an amount management considers adequate to cover
estimated losses in loans receivable which are deemed probable and estimable
based on information available to management at such time. While management
believes the Bank's allowance for loan losses is sufficient to cover losses
inherent in its loan portfolio at this time, no assurances can be given that the
Bank's level of allowance for loan losses will be sufficient to cover future
loan losses incurred by the Bank or that future adjustments to the allowance for
loan losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions used by management to
determine the current level of the allowance for loan losses. The allowance is
based upon a number of factors, including asset classifications, economic
trends, industry experience and trends, industry and geographic concentrations,
estimated collateral values, management's assessment of the credit risk inherent
in the portfolio, historical loan loss experience, and the Bank's underwriting
policies. As of December 31, 1997, the Bank's allowance for loan losses was .17%
of total loans as compared to .15% as of December 31, 1996. The Bank had
$174,000 of nonperforming loans at December 31, 1997 and $109,000 at December
31, 1996. The Bank will continue to monitor and modify its allowances for loan
losses as conditions dictate. Various regulatory agencies, as an integral part
of their examination process, periodically review the Bank's valuation
allowance. These agencies may require the Bank to establish additional valuation
allowances, based on their judgments of the information available at the time of
the examination.

         At December 31, 1997, the Bank had no REO. For a description of how the
Bank would treat REO, see the Financial Statements and Notes thereto appearing
elsewhere in this Form 10-K.

                                       11

<PAGE>



         The following table sets forth activity in the Bank's allowance for
loan losses for the periods set forth in the table.

<TABLE>
<CAPTION>
                                                                       At or For the Year Ended December 31,
                                                         ------------------------------------------------------------------
                                                            1997          1996          1995          1994         1993
                                                         -----------   -----------   -----------   ----------   -----------
                                                                               (Dollars in thousands)
<S><C>
Allowance for loan losses:
Balance at beginning of period........................        $58           $60           $66          $66           $57
Provision (credit) for loan losses....................         10            --            (2)          --             6
Charge-offs:
    Consumer..........................................          3             4             5            1            --
                                                              ---            --            --           --           ---
       Total charge-offs..............................          3             4             5            1            --
Recoveries:
    Consumer..........................................          1             2             1            1             3
                                                              ---           ---            --           --           ---
       Total recoveries...............................          1             2             1            1             3
                                                              ---           ---            --          ---           ---
Net charge-offs.......................................          2             2             4           --            (3)
                                                              ---           ---            --          ---
Balance at end of period..............................        $66           $58           $60          $66           $66
                                                              ===           ===           ===          ===           ===
Ratio of net loan charge-offs
   during the period to average
   loans outstanding during period....................        .01%          .01%          .01%          --%         (.01)%
Ratio of allowance for loan losses
   to gross loans at end of period....................        .17           .15           .18          .21           .23
Ratio of allowance for loan losses
   to non-performing loans
   at end of period...................................      37.93         53.21         66.67        71.17         59.86
</TABLE>


                                       12

<PAGE>



         The following tables set forth the Bank's allocation of allowance for
loan losses by loan category, the percent of the allocated allowance to the
total allowance and the percent of each specific loan category to total loans.
The portion of the allowance for loan losses allocated to each loan category
does not represent the total available for future losses which may occur within
the loan category since the total allowance for loan losses is a valuation
reserve applicable to the entire loan portfolio.

<TABLE>
<CAPTION>
                                                                   AT DECEMBER 31,
                          ----------------------------------------------------------------------------------------------
                                              1997                                             1996
                          ---------------------------------------------   ----------------------------------------------
                                           PERCENT OF      PERCENT OF                     PERCENT OF       PERCENT OF
                                           ALLOWANCE        LOANS IN                      ALLOWANCE         LOANS IN
                                            TO TOTAL     EACH CATEGORY                     TO TOTAL      EACH CATEGORY
                             AMOUNT        ALLOWANCE     TO TOTAL LOANS      AMOUNT       ALLOWANCE      TO TOTAL LOANS
                          -------------   ------------   --------------   ------------   ------------   ----------------
                                                               (DOLLARS IN THOUSANDS)
<S><C>
One- to four-family....        $34            51.51%           94.67%           $20          34.48%             93.63%
Consumer...............         32            48.49             5.33             38          65.52               6.37
                               ---            -----           ------            ---         ------             ------
  Total allowance for
       loan losses.....        $66           100.00%          100.00%           $58         100.00%            100.00%
                               ===           ======           ======            ===         ======             ======
</TABLE>

<TABLE>
<CAPTION>
                                           AT DECEMBER 31,
                             -------------------------------------------
                                                1995
                             -------------------------------------------
                                           PERCENT OF       PERCENT OF
                                            ALLOWANCE     LOANS IN EACH
                                            TO TOTAL         CATEGORY
                               AMOUNT       ALLOWANCE     TO TOTAL LOANS
                             -----------  -------------   --------------
                                      (DOLLARS IN THOUSANDS)

<S><C>
One- to four-family....           $20          33.33%           91.59%
Consumer...............            40          66.67             8.41
                                   --          -----            -----
  Total allowance for
       loan losses.....           $60         100.00%          100.00%
                                  ===         ======           ======
</TABLE>


<TABLE>
<CAPTION>
                                                                 AT DECEMBER 31,
                           --------------------------------------------------------------------------------------------
                                               1994                                           1993
                           --------------------------------------------   ---------------------------------------------
                                          PERCENT OF      PERCENT OF                      PERCENT OF       PERCENT OF
                                           ALLOWANCE     LOANS IN EACH                    ALLOWANCE      LOANS IN EACH
                                           TO TOTAL       CATEGORY TO                      TO TOTAL         CATEGORY
                              AMOUNT       ALLOWANCE      TOTAL LOANS        AMOUNT       ALLOWANCE      TO TOTAL LOANS
                           ------------  -------------  ---------------   ------------   ------------    --------------
                                                              (DOLLARS IN THOUSANDS)
<S><C>
One- to four-family.....       $20          30.30%           92.23%           $20          30.30%            92.22%
Consumer................        46          69.70             7.77             46          69.70              7.78
                               ---         ------             ----            ---         ------              ----
  Total allowance for
    loan losses.........       $66         100.00%          100.00%           $66         100.00%           100.00%
                               ===         ======           ======            ===         ======            ======
</TABLE>

                                       13

<PAGE>



INVESTMENT ACTIVITIES

         Federal and state regulations require the Bank to maintain a prudent
amount of liquid assets to protect the safety and soundness of the Bank.
Therefore, the investment policy of the Bank as established by the Board of
Directors attempts to provide and maintain liquidity, generate a favorable
return on investments without incurring undue interest rate and credit risk and
complement the Bank's lending activities. The Bank's policies generally limit
investments to government and federal agency-backed securities and other
non-government guaranteed securities, including corporate debt obligations, that
are investment grade. The Bank's policies provide the authority to invest in
U.S. Treasury and U.S. Government guaranteed securities, securities backed by
federal agencies such as Federal National Mortgage Association ("FNMA"), Federal
Home Loan Mortgage Corporation ("FHLMC") and the Federal Farm Credit Bureau,
mortgage-backed securities which are backed by federal agency securities,
obligations of state and political subdivisions with at least an "A" rating,
certificates of deposit purchased through the FHLB and securities issued by
mutual funds which invest in securities consistent with the Bank's allocable
investments. The Bank's policies provide that the Chief Financial Officer is
authorized to execute all transactions within specified limits which are
reviewed by the Board of Directors on a monthly basis and are currently $1.0
million. From time to time the Board of Directors may authorize the Chief
Financial Officer to exceed the policy limitations.

         At December 31, 1997, the Bank had a total of $11.2 million in
certificates of deposit, other interest earning deposits, corporate notes,
federal funds and other investment and mortgage-backed securities. At December
31, 1997, all investment and mortgage-backed securities were classified as
available for sale. Included in this total, at December 31, 1997, the Bank had
$4.3 million in U.S. Government and agencies securities and $1.0 million in
mortgage-backed securities. Collaterialized mortgage obligations of $4.8 million
are classified as held to maturity. Investments in mortgage-backed securities
involve a risk that actual prepayments will exceed prepayments estimated over
the life of the security which may result in a loss of any premium paid for such
instruments thereby reducing the net yield on such securities. In addition, if
interest rates increase, the market value of such securities may be adversely
affected which, in turn, would adversely affect stockholders' equity to the
extent such securities are held for sale. The Bank may invest in mortgage-backed
securities in the future.

                                       14

<PAGE>



         The following table sets forth certain information regarding the
carrying and market values of the Bank's federal funds sold and other short-term
investments and investment securities at the dates indicated:

<TABLE>
<CAPTION>
                                                                  AT DECEMBER 31,
                                    ---------------------------------------------------------------------------
                                              1997                     1996                      1995
                                    ------------------------  -----------------------  ------------------------
                                     AMORTIZED       FAIR      AMORTIZED      FAIR      AMORTIZED       FAIR
                                       COST         VALUE        COST        VALUE         COST        VALUE
                                    -----------   ----------  -----------  ----------  ------------  ----------
                                                                  (IN THOUSANDS)
<S><C>
Certificates of deposit(1)......        $   173      $   173       $  162      $  162        $  151      $  151
Other interest-earning deposits.            162          162          357         357           164         164
Investment securities:
   Corporate notes..............             --           --           --          --           455         456
   Federal funds................             84           84          364         364            97          97
   FHLB stock...................            625          625          436         436           407         407
   U.S. government obligations..          4,294        4,291        6,193       6,089         5,567       5,625
   Mutual Funds.................             26           26           14          14             1           1
   Mortgage-backed securities(2)          5,792        5,791        1,148       1,148         1,024       1,082
                                      ---------    ---------      -------     -------         -----       -----
      Total.....................        $11,156      $11,152       $8,674      $8,570        $7,866      $7,983
                                        =======      =======       ======      ======        ======      ======
</TABLE>

----------------------------
(1) Includes certificates of deposit with original maturities of greater than 90
    days.
(2) Includes mortgage-backed securities and collateralized mortgage obligations.


                                       15

<PAGE>



         The table below sets forth certain information regarding the carrying
value, weighted average yields and contractual maturities of the Bank's
certificates of deposit, other interest-bearing deposits and investment
securities as of December 31, 1997.

<TABLE>
<CAPTION>
                                                                        AT DECEMBER 31, 1997
                                           -------------------------------------------------------------------------------
                                                                            MORE THAN ONE              MORE THAN FIVE
                                               ONE YEAR OR LESS          YEAR TO FIVE YEARS          YEARS TO TEN YEARS
                                           ------------------------   -------------------------   ------------------------
                                                         WEIGHTED                    WEIGHTED                   WEIGHTED
                                            CARRYING      AVERAGE      CARRYING      AVERAGE       CARRYING      AVERAGE
                                             VALUE         YIELD        VALUE         YIELD          VALUE        YIELD
                                           ----------   -----------   ----------   ------------   -----------  -----------
                                                                       (DOLLARS IN THOUSANDS)
<S><C>
Certificates of Deposit(1)..............     $  --            --%       $ 173          5.98%        $   --           --%
Other interest-bearing deposits.........       162          5.90           --            --             --           --
Investment securities:
     U.S. government obligations........        --            --           --            --          2,096         6.97
     Federal funds......................        84          5.85           --            --             --           --
     Mutual funds.......................        26          5.20           --            --             --           --
     FHLB stock.........................        --            --           --            --             --           --
     Mortgage-backed securities.........         1          9.57           --            --            208         7.69
                                             -----                       ----                       ------
       Total............................     $ 273          5.80%       $ 173          5.98%        $2,304         7.04%
                                             =====                      =====                       ======
</TABLE>

<TABLE>
<CAPTION>
                                                             AT DECEMBER 31, 1997
                                            ---------------------------------------------------

                                              MORE THAN TEN YEARS               TOTAL
                                            -----------------------   -------------------------
                                                         WEIGHTED                    WEIGHTED
                                             CARRYING     AVERAGE      CARRYING      AVERAGE
                                              VALUE        YIELD         VALUE        YIELD
                                            ----------  -----------   -----------  ------------
                                                            (DOLLARS IN THOUSANDS)
<S><C>
Certificates of Deposit(1)..............      $   --           --%      $   173          5.98%
Other interest-bearing deposits.........          --           --           162          5.90
Investment securities:
     U.S. government obligations........       2,198         7.29         4,294          7.13
     Federal funds......................          --           --            84          5.85
     Mutual funds.......................          --           --            26          5.20
     FHLB stock.........................         625         7.50           625          7.50
     Mortgage-backed securities.........       5,583         6.84         5,792          6.85
                                              ------                    -------
       Total............................      $8,406         7.01%      $11,156          6.97%
                                              ======                    =======
</TABLE>

-----------------------------
(1)   Includes certificates of deposit with original maturities of greater than
      90 days.
(2)   Include mortgage-backed securities and collaterialized mortgage
      obligations.

                                       16

<PAGE>



SOURCE OF FUNDS

         GENERAL.  Deposits, loan repayments and prepayments, and cash flows
generated from operations are the primary source of the Bank's funds for use in
lending, investing and for other general purposes.  The Bank also relies upon
advances from the FHLB.

         DEPOSITS. The Bank offers a variety of deposit accounts with a range of
interest rates and terms. For the year ended December 31, 1997, certificates of
deposit constituted 67.10% of total average deposits.

         The Bank's current deposit products include savings, NOW accounts,
money market and certificate of deposit accounts ranging in term from thirty
days to five years. Included in the Bank's certificate of deposit accounts are
certificates of deposit with balances in excess of $100,000 (jumbo
certificates), and Individual Retirement Accounts ("IRAs").

         Deposits are obtained primarily from residents of Hamilton County,
Ohio. The Bank seeks to attract deposit accounts by offering a variety of
products, competitive rates, and service hours. Although a substantial amount of
the Bank's depositors are past and present Procter & Gamble employees, the Bank
has sought to attract new depositors through traditional methods of advertising,
including print media advertising. The Bank does not generally advertise outside
of its market area or utilize the services of deposit brokers. Management
believes that an insignificant number of deposit accounts are held by
non-residents of the Bank's primary market area.

         The Bank sets interest rates on its deposits on a weekly basis, based
upon a number of factors, including: the previous week's deposit flow; a current
survey of a selected group of competitors' rates for similar products; external
data which may influence interest rates; investment opportunities and loan
demand; and scheduled maturities.

         The following table presents the deposit activity of the Bank for the
periods indicated.

<TABLE>
<CAPTION>
                                          -----------------------------------------------
                                               1997            1996             1995
                                          --------------   -------------   --------------
<S><C>
Balance beginning of period............      $32,551         $33,669          $35,526
   Net increase (decrease)
      before interest credited.........       (2,171)         (2,772)          (3,506)
   Interest credited...................        1,487           1,604            1,649
                                             -------         -------          -------
       Balance end of period...........      $31,867         $32,551          $33,669
                                             =======         =======          =======
</TABLE>


                                       17

<PAGE>



         At December 31 , 1997, the Bank had $4.0 million in certificate
accounts in amounts of $100,000 or more maturing as follows:

<TABLE>
<CAPTION>
                                                                                 WEIGHTED
                   MATURITY PERIOD                           AMOUNT            AVERAGE RATE
                   ---------------                        ------------      ------------------
                                                                (DOLLARS IN THOUSANDS)
<S><C>
Three months or less.................................           $709                   6.56%
Over three through six months........................            104                   4.89
Over six through 12 months...........................            213                   6.02
Over 12 months.......................................          2,973                   6.42
                                                               -----
         Total.......................................         $3,999                   6.39
                                                              ======
</TABLE>

         The following table sets forth the distribution of the Bank's average
deposit accounts for the periods indicated and the weighted average interest
rates on each category of deposits presented.

<TABLE>
<CAPTION>
                                                    FOR THE YEAR ENDED DECEMBER 31,
                    -----------------------------------------------------------------------------------------------
                                 1997                             1996                            1995
                    -------------------------------  ------------------------------  ------------------------------
                                PERCENT                         PERCENT                        PERCENT
                                OF TOTAL  WEIGHTED              OF TOTAL  WEIGHTED             OF TOTAL   WEIGHTED
                     AVERAGE    AVERAGE    AVERAGE    AVERAGE   AVERAGE    AVERAGE   AVERAGE   AVERAGE     AVERAGE
                     BALANCE    DEPOSITS    RATE      BALANCE   DEPOSITS    RATE     BALANCE   DEPOSITS     RATE
                    ----------  --------  ---------  ---------  --------  ---------  -------   --------   ---------
                                                        (DOLLARS IN THOUSANDS)
<S><C>
Statement savings
   accounts......    $ 5,113     16.42%      2.60%   $ 6,047     17.67%    2.58%   $ 5,805      16.94%     2.68%
NOW and Money
    Market
   accounts......      5,131     16.48       2.75      5,281     15.43     2.46      5,155      15.05      2.47
Total certificate
    accounts.....     20,890     67.10       5.81     22,896     66.90     5.75     23,299      68.01      5.87
                     -------   -------               -------    ------             -------     ------
Total average
deposits.........    $31,134    100.00%      4.78%   $34,224    100.00%     4.68   $34,259     100.00%     4.81%
                     =======   =======               =======    ======             =======     ======
</TABLE>


                                       18

<PAGE>



         The following table presents, by various rate categories, the amount of
certificate accounts outstanding at the dates indicated and the periods to
maturity of the certificate accounts outstanding at December 31, 1997, 1996 and
1995.

<TABLE>
<CAPTION>
                                                                  PERIOD TO MATURITY FROM DECEMBER 31, 1997
                                           ---------------------------------------------------------------------------------------

                                              LESS THAN           ONE TO            TWO TO           THREE TO          FOUR TO
                                               ONE YEAR          TWO YEARS        THREE YEARS       FOUR YEARS        FIVE YEARS
                                           ----------------   ---------------   ---------------   ---------------   --------------
                                                                                 (IN THOUSANDS)
<S><C>
Certificate accounts(1):
0 to 4.00%...............................      $    --            $   --            $   --            $   --           $   --
4.01 to 5.00%............................          217                --                --                --               --
5.01 to 6.00%............................        9,550             2,688             1,054             1,176            1,069
6.01 to 7.00%............................        2,319             1,711             1,086               147               46
7.01 to 8.00%............................           --               398               160                --               --
8.01 to 9.00%............................           --                --                --                --               --
Over 9.01%...............................           --                --                --                --               --
                                               -------           -------           -------           -------          -------

   Total.................................      $12,086            $4,797            $2,300            $1,323           $1,115
                                               =======            ======            ======            ======           ======
</TABLE>

<TABLE>
<CAPTION>
                                                               AT DECEMBER 31,
                                               ------------------------------------------------


                                                    1997             1996             1995
                                               --------------   -------------------------------
                                                               (IN THOUSANDS)
<S><C>
Certificate accounts(1):
0 to 4.00%...............................        $    --          $    --          $    --
4.01 to 5.00%............................            217              412              797
5.01 to 6.00%............................         15,537           16,122           12,972
6.01 to 7.00%............................          5,309            5,187            7,944
7.01 to 8.00%............................            558              149              753
8.01 to 9.00%............................             --               --               --
Over 9.01%...............................             --               --               --
                                                 -------          -------          -------

   Total.................................        $21,621          $21,870          $22,466
                                                 =======          =======          =======
</TABLE>

-------------------------
(1)   Certificates of deposit include IRA accounts of $8,768, $9,430 and $9,899
      as of December 31, 1997, 1996 and 1995, respectively.


                                       19

<PAGE>



BORROWINGS

         At December 31, 1997, the Bank had $7.0 million in outstanding advances
from the FHLB and had no other borrowings. The FHLB advances are used by the
Bank to fund assets, including loan originations. The majority of FHLB advances
bear fixed rates and have terms of one year or less. The maximum amount that the
FHLB will advance to member institutions, including the Bank, fluctuates from
time to time in accordance with current regulations. The Bank may obtain
additional advances from the FHLB as part of its operating strategy.

         The following table sets forth certain information regarding the Bank's
borrowed funds at or for the periods ended on the dates indicated:

<TABLE>
<CAPTION>
                                                                             AT OR FOR THE YEAR
                                                                             ENDED DECEMBER 31,
                                                              -------------------------------------------------
                                                                    1997             1996             1995
                                                              ----------------  --------------   --------------
                                                                           (DOLLARS IN THOUSANDS)
<S><C>
FHLB advances:
  Average balance outstanding..............................       $ 9,499          $5,924           $3,199
  Maximum amount outstanding at any
       month-end during the period.........................        12,287           7,007            5,806
  Balance outstanding at end of period.....................        12,287           7,007            5,327
  Weighted average interest rate during the period.........          5.70%           5.77%            6.16%
  Weighted average interest rate at end of period..........          5.78%           5.73%            6.09%
</TABLE>

PERSONNEL

         As of December 31, 1997, the Bank had 14 full-time employees and one
part-time employee. The employees are not represented by a collective bargaining
unit, and the Bank considers its relationship with its employees to be good.


                                       20

<PAGE>



                           REGULATION AND SUPERVISION


GENERAL

         The Bank is an Ohio chartered savings bank, a member of the FHLB
system, and its deposit accounts are insured up to applicable limits by the FDIC
through the SAIF. The Bank is subject to extensive regulation, examination and
supervision by the FDIC and the Superintendent of the Ohio Division of Commerce,
Division of Financial Institutions (the "Superintendent"). The Bank must file
reports with the Superintendent and the FDIC concerning its activities and
financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with, or acquisitions of,
other financial institutions. There are periodic examinations by the
Superintendent and the FDIC to test the Bank's compliance with various
regulatory requirements. This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such policies, whether by the Superintendent, the FDIC or the
Congress, could have a material adverse impact on the Company, the Bank and
their operations. The Company, as a savings and loan holding company, is also
required to file certain reports with, and otherwise comply with the rules and
regulations of the OTS and of the Securities and Exchange Commission (the "SEC")
under the federal securities laws. Certain of the regulatory requirements
applicable to the Bank and to the Company are referred to below or elsewhere
herein.

         As an insured depository institution, the Bank is subject to the
Community Reinvestment Act ("CRA") and to various statutes and implementing
regulations promulgated by the Board of Governors of the Federal Reserve System
(the "FRB") including, without limitation, regulations relating to equal credit
opportunity, reserves, electronic fund transfers, truth in lending, availability
of funds, and truth in savings. As lenders whose loans are secured by real
property and as owners of real property, financial institutions, including the
Bank, may be subject to potential liability under various statutes and
regulations applicable to property owners generally, including statutes and
regulations relating to the environmental condition of real property. The Bank
is also subject to the usury laws of Ohio and other states in which it makes
loans. In Ohio, there is a maximum interest rate applicable to mortgage loans
secured by the borrower's residence which is no greater than eight percent in
excess of the discount rate on ninety-day commercial paper in effect at the
Federal Reserve Bank in the Fourth Federal Reserve District. There are also
limitations on interest rates for other loans, such as consumer loans, and
limitations on the amounts of fees which may be charged in connection with such
loans.

         The FDIC has extensive enforcement authority over insured
Ohio-chartered savings banks, including the Bank. This enforcement authority
includes, among other things, the ability to assess civil money penalties, to
issue cease and desist or removal orders and to initiate injunctive actions. In
general, these enforcement actions may be initiated in response to violations of
laws and regulations and unsafe or unsound practices.



                                       21

<PAGE>



         The FDIC has authority to appoint a conservator or receiver for an
insured savings bank under certain circumstances. The grounds for appointment of
a conservator or receiver for a state savings bank on the basis of an
institution's financial condition include: (i) insolvency, in that the assets of
the savings bank are less than its liabilities to depositors and others; (ii)
substantial dissipation of assets or earnings through violations of law or
unsafe or unsound practices; (iii) existence of an unsafe or unsound condition
to transact business; (iv) likelihood that the savings bank will be unable to
meet the demands of its depositors or to pay its obligations in the normal
course of business; and (v) insufficient capital, or the incurring or likely
incurring of losses that will deplete substantially all the institution's
capital with no reasonable prospect of replenishment of capital without federal
assistance.

DIVISION REGULATION

         The Superintendent is responsible for the regulation and supervision of
Ohio savings banks in accordance with the laws of the State of Ohio. Ohio law
prescribes the permissible investments and activities of Ohio savings banks,
including the types of lending that such banks may engage in and the investments
in real estate, subsidiaries and corporate or government securities that such
banks may make. The ability of Ohio savings banks to engage in these
state-authorized investments generally is subject to various limitations under
FDIC regulations and oversight by the FDIC.

         Any mergers involving, or acquisitions of control of, Ohio savings
banks are subject to the prior approval of the Superintendent. The
Superintendent may initiate certain supervisory measures or formal enforcement
actions against Ohio savings banks. Ultimately, if the grounds provided by law
exist, the Superintendent may place an Ohio savings bank in conservatorship or
receivership.

         The Superintendent conducts regular examinations of the Bank
approximately once a year. The Superintendent imposes assessments on Ohio
savings banks based on the savings bank's asset size to cover the cost of
supervision and examination.

         In addition to being governed by the laws of Ohio specifically
governing savings banks, the Bank is also governed by Ohio corporate law, to the
extent such law does not conflict with the laws specifically governing savings
banks.

         Since the enactment of the Federal Deposit Insurance Corporation
Improvement Act of 1991, all state-chartered financial institutions, including
savings banks and their subsidiaries have generally been limited to activities
and equity investments of the type and in the amount authorized for national
banks, notwithstanding state law. The FDIC is authorized to permit such
institutions to engage in state authorized activities or investments that do not
meet this standard (other than non-subsidiary equity investments) for
institutions that meet all applicable capital requirements if it is determined
that such activities or investments do not pose a significant risk to the SAIF.
All non-subsidiary equity investments were required to be divested by December
19, 1996, pursuant to an FDIC-approved divestiture plan. The FDIC restrictions
on state-chartered institutions have not affected the operations of the Bank.

FDIC REGULATIONS

         CAPITAL REQUIREMENTS.  The FDIC has adopted risk-based capital
guidelines to which the Bank is subject.  The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations.  The Bank is
required to maintain certain levels of regulatory capital in relation to
regulatory risk-weighted assets.  The

                                       22

<PAGE>



ratio of such regulatory capital to regulatory risk-weighted assets is referred
to as the Bank's "risk-based capital ratio." Risk-based capital ratios are
determined by allocating assets and specified off-balance sheet items to four
risk-weighted categories ranging from 0% to 100%, with higher levels of capital
being required for the categories perceived as representing greater risk.

         These guidelines divide a savings bank's capital into two tiers. The
first tier ("Tier I") includes common equity, retained earnings, certain
non-cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations).
Supplementary ("Tier II") capital includes, among other items, cumulative
perpetual and long-term limited-life preferred stock, mandatory convertible
securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan and lease losses limited to a maximum of 1.25% of risk
weighted assets, subject to certain limitations, less required deductions.
Savings banks are required to maintain a total risk-based capital ratio of 8%,
of which at least 4% must be Tier I capital.

         In addition, the FDIC has established regulations prescribing a minimum
Tier I leverage ratio (Tier I capital to adjusted total assets as specified in
the regulations). These regulations provide for a minimum Tier I leverage ratio
of 3% for banks that meet certain specified criteria, including that they have
the highest examination rating and are not experiencing or anticipating
significant growth. All other banks are required to maintain a Tier I leverage
ratio of 3% plus an additional cushion of at least 100 to 200 basis points. The
federal banking agencies, including the FDIC, have proposed a uniform minimum
Tier 1 leverage ratio of 4% for all but the highest rated banks. The FDIC may,
however, set higher capital requirements on individual institutions when
particular circumstances warrant. Savings banks experiencing or anticipating
significant growth are expected to maintain capital ratios, including tangible
capital positions, well above the minimum levels.

         The following is a summary of the Bank's regulatory capital at December
31, 1997:

            GAAP Capital to Total Assets.........................    13.5%
            Total Capital to Risk-Weighted Assets................    11.9%
            Tier I Leverage Ratio................................    23.8%

         In August 1995, the FDIC, along with the other federal banking
agencies, adopted a regulation providing that the agencies will take account of
the exposure of a bank's capital and economic value to changes in interest rate
risk in assessing a bank's capital adequacy. According to the agencies,
applicable considerations include the quality of the bank's interest rate risk
management process, the overall financial condition of the bank and the level of
other risks at the bank for which capital is needed. Institutions with
significant interest rate risk may be required to hold additional capital. The
agencies also have issued a joint policy statement providing guidance on
interest rate risk management, including a discussion of the critical factors
affecting the agencies' evaluation of interest rate risk in connection with
capital adequacy. The agencies have determined not to proceed with a previously
issued proposal to develop a supervisory framework for measuring interest rate
risk and an explicit capital component for interest rate risk.

         DIVIDEND LIMITATIONS.  The FDIC has authority to use its enforcement
powers to prohibit a savings bank from paying dividends if, in its opinion, the
payment of dividends would constitute an unsafe or unsound practice.  Under Ohio
law, the Company and the Bank are prohibited from paying a dividend which would
result in insolvency.  Ohio law requires the Bank to obtain Division approval
before payment of dividends in excess of net profits for the current and two
prior fiscal years, with certain adjustments.  Federal

                                       23

<PAGE>



law prohibits the payment of dividends by a bank that will result in the bank
failing to meet applicable capital requirements on a pro forma basis.
Additionally, the Bank, as a subsidiary of a savings and loan holding company,
is required to provide the OTS with 30 days prior written notice before
declaring any dividend. The Bank's Plan of Conversion also restricts the Bank's
payment of dividends in the event the dividend would impair the liquidation
account established in connection with the Conversion.

         STANDARDS FOR SAFETY AND SOUNDNESS. Federal law requires each federal
banking agency to prescribe for depository institutions under its jurisdiction
standards relating to, among other things, internal controls; information
systems and audit systems; loan documentation; credit underwriting; interest
rate risk exposure; asset growth; compensation, fees and benefits; and such
other operational and managerial standards as the agency deems appropriate. The
federal banking agencies adopted final regulations and Interagency Guidelines
Prescribing Standards for Safety and Soundness (the "Guidelines") to implement
these safety and soundness standards. The Guidelines set forth the safety and
soundness standards that the federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes
impaired. The Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation; interest rate
risk exposure; asset growth; asset quality; earnings and compensation; fees and
benefits. If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by the Federal Deposit
Insurance Act, as amended (the "FDI Act"). The final regulation establishes
deadlines for the submission and review of such safety and soundness compliance
plans.

         LIQUIDITY. FDIC policy requires that savings banks maintain an average
daily balance of liquid assets (cash, certain time deposits, bankers'
acceptances and specified United States government, state or federal agency
obligations) in an amount which it deems adequate to protect the safety and
soundness of the savings bank. The FDIC currently has no specific level which is
required.

PROMPT CORRECTIVE REGULATORY ACTION

         Federal law requires, among other things, that federal bank regulatory
authorities take "prompt corrective action" with respect to banks that do not
meet minimum capital requirements. For these purposes, the law establishes five
capital categories: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized. At December 31,
1997, the Bank was categorized as "well capitalized."

         The FDIC has adopted regulations to implement the prompt corrective
action legislation. Among other things, the regulations define the relevant
capital measures for the five capital categories. An institution is deemed to be
"well capitalized" if it has a total risk-based capital ratio of 10% or greater,
a Tier I risk-based capital ratio of 6% or greater, and a leverage ratio of 5%
or greater, and is not subject to a regulatory order, agreement or directive to
meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, a Tier I risk-based capital ratio of
4% or greater, and generally a leverage ratio of 4% or greater. An institution
is deemed to be "undercapitalized" if it has a total risk-based capital ratio of
less than 8%, a Tier I risk-based capital ratio of less than 4%, or generally a
leverage ratio of less than 4%. An institution is deemed to be "significantly
undercapitalized" if it has a total risk-based capital ratio of less than 6%, a
Tier I risk-based capital ratio of less than 3%, or a leverage ratio of less
than 3%. An institution is deemed to be "critically undercapitalized" if it has
a ratio of tangible equity (as defined in the regulations) to total assets that
is equal to or less than 2%.

                                       24

<PAGE>



         Subject to a narrow exception, the banking regulator is required to
appoint a receiver or conservator for an institution that is "critically
undercapitalized." The regulation also provides that a capital restoration plan
must be filed with the OTS within 45 days of the date a savings institution
receives notice that it is "undercapitalized," "significantly undercapitalized"
or "critically undercapitalized." Compliance with the plan must be guaranteed by
any parent holding company. In addition, numerous mandatory supervisory actions
become immediately applicable to an undercapitalized institution, including, but
not limited to, increased monitoring by regulators and restrictions on growth,
capital distributions and expansion. The OTS could also take any one of a number
of discretionary supervisory actions, including the issuance of a capital
directive and the replacement of senior executive officers and directors.

         INSURANCE OF DEPOSIT ACCOUNTS. Deposits of the Bank are presently
insured by the SAIF. On September 30, 1996, the President signed into law the
Deposit Insurance Funds Act of 1996 (the "Funds Act") which, among other things,
imposed a special one-time assessment on SAIF member institutions, including the
Bank, to recapitalize the SAIF. The SAIF was undercapitalized due primarily to a
statutory requirement that SAIF members make payments on bonds issued in the
late 1980s by the Financing Corporation ("FICO") to recapitalize the predecessor
to the SAIF. As required by the Funds Act, the FDIC imposed a special assessment
of 65.7 basis points on SAIF assessable deposits held as of March 31, 1995,
payable November 27, 1996 (the "SAIF Special Assessment"). The SAIF Special
Assessment was recognized by the Bank as an expense in the quarter ended
September 30, 1996 and was generally tax deductible. The SAIF Special Assessment
recorded by the Bank amounted to $225,000 on a pre-tax basis and $148,000 on an
after-tax basis.

         The Funds Act also spreads the obligations for payment of the FICO
bonds across all SAIF and Bank Insurance Fund ("BIF") members. The BIF is the
fund which primarily insures commercial bank deposits. Beginning on January 1,
1997, BIF deposits were assessed for a FICO payment of approximately 1.3 basis
points, while SAIF deposits pay approximately 6.4 basis points. Full pro rata
sharing of the FICO payments between BIF and SAIF members will occur on the
earlier of January 1, 2000 or the date the BIF and SAIF are merged. The Funds
Act specifies that the BIF and SAIF will be merged on January 1, 1999, provided
no savings associations remain as of that time.

         As a result of the Funds Act, the FDIC voted to effectively lower SAIF
assessments to 0 to 27 basis points as of January 1, 1997, a range comparable to
that of BIF members. SAIF members will also continue to make the FICO payments
described above. Management cannot predict the level of FDIC insurance
assessments on an on-going basis, whether the savings association charter will
be eliminated or whether the BIF and SAIF will eventually be merged.

         The Bank's assessment rate for fiscal 1997 ranged from 6.3 to 6.5 basis
points and the premium paid for this period was $21,000. A significant increase
in SAIF insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of the Bank.

         Under the FDI Act, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
OTS. The management of the Bank does not know of any practice, condition or
violation that might lead to termination of deposit insurance.


                                       25

<PAGE>



         THRIFT RECHARTERING LEGISLATION. The Funds Act provides that the BIF
and SAIF will merge on January 1, 1999 if there are no more savings associations
as of that date. Various proposals to eliminate the federal thrift charter,
create a uniform financial institutions charter and abolish the OTS have been
introduced in Congress. Some bills would require federal savings institutions to
convert to a national bank or some type of state charter by a specified date
under some bills, or they would automatically become national banks. Under some
proposals, converted federal thrifts would generally be required to conform
their activities to those permitted for the charter selected and divestiture of
nonconforming assets would be required over a two year period, subject to two
possible one year extensions. State chartered thrifts would become subject to
the same federal regulation as applies to state commercial banks. A more recent
bill passed by the House Banking Committee would allow savings institutions to
continue to exercise activities being conducted when they convert to a bank
regardless of whether a national bank could engage in the activity. Holding
companies for savings institutions would become subject to the same regulation
as holding companies that control commercial banks, with some limited
grandfathering, including savings and loan holding company activities. The
grandfathering would be lost under certain circumstances such as a change in
control of the Company. The Bank is unable to predict whether such legislation
would be enacted or the extent to which the legislation would restrict or
disrupt its operations.

         TRANSACTIONS WITH RELATED PARTIES. The Bank's authority to engage in
transactions with related parties or "affiliates" (E.G., any company that
controls or is under common control with an institution, including the Company
and its non-savings institution subsidiaries) is limited by Sections 23A and 23B
of the Federal Reserve Act ("FRA"). Section 23A limits the aggregate amount of
covered transactions with any individual affiliate to 10% of the capital and
surplus of the savings institution. The aggregate amount of covered transactions
with all affiliates is limited to 20% of the savings institution's capital and
surplus. Certain transactions with affiliates are required to be secured by
collateral in an amount and of a type described in Section 23A and the purchase
of low quality assets from affiliates is generally prohibited. Section 23B
generally provides that certain transactions with affiliates, including loans
and asset purchases, must be on terms and under circumstances, including credit
standards, that are substantially the same or at least as favorable to the
institution as those prevailing at the time for comparable transactions with
non-affiliated companies. In addition, savings institutions are prohibited from
lending to any affiliate that is engaged in activities that are not permissible
for bank holding companies and no savings institution may purchase the
securities of any affiliate other than a subsidiary.

         The Bank's authority to extend credit to executive officers, directors
and 10% shareholders ("insiders"), as well as entities such persons control, is
governed by Sections 22(g) and 22(h) of the FRA and Regulation O thereunder.
Among other things, such loans are required to be made on terms substantially
the same as those offered to unaffiliated individuals and to not involve more
than the normal risk of repayment. Recent legislation created an exception for
loans made pursuant to a benefit or compensation program that is widely
available to all employees of the institution and does not give preference to
insiders over other employees. Regulation O also places individual and aggregate
limits on the amount of loans the Bank may make to insiders based, in part, on
the Bank's capital position and requires certain board approval procedures to be
followed.

         ENFORCEMENT. Under the FDI Act, the FDIC has primary enforcement
responsibility over the Bank and has the authority to bring actions against the
institution and all institution-affiliated parties, including stockholders, and
any attorneys, appraisers and accountants who knowingly or recklessly
participate in wrongful action likely to have an adverse effect on an insured
institution. Formal enforcement action may range from the issuance of a capital
directive or cease and desist order to removal of officers and/or directors to
institution of receivership, conservatorship or termination of deposit
insurance. Civil penalties cover a

                                       26

<PAGE>



wide range of violations and can amount to $25,000 per day, or even $1 million
per day in especially egregious cases. Federal law also establishes criminal
penalties for certain violations.

         STANDARDS FOR SAFETY AND SOUNDNESS. The federal banking agencies have
adopted Interagency Guidelines Prescribing Standards for Safety and Soundness
("Guidelines") and a final rule to implement safety and soundness standards
required under the FDI Act. The Guidelines set forth the safety and soundness
standards that the federal banking agencies use to identify and address problems
at insured depository institutions before capital becomes impaired. The
standards set forth in the Guidelines address internal controls and information
systems; internal audit system; credit underwriting; loan documentation;
interest rate risk exposure; asset growth; asset quality; earnings; and
compensation, fees and benefits. If the appropriate federal banking agency
determines that an institution fails to meet any standard prescribed by the
Guidelines, the agency may require the institution to submit to the agency an
acceptable plan to achieve compliance with the standard, as required by the FDI
Act. The final rule establishes deadlines for the submission and review of such
safety and soundness compliance plans when such plans are required.

FEDERAL RESERVE SYSTEM

         The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally required for most of 1997 that reserves be maintained
against aggregate transaction accounts as follows: for accounts aggregating
$49.3 million or less (subject to adjustment by the Federal Reserve Board) the
reserve requirement was 3%; and for accounts aggregating greater than $49.3
million, the reserve requirement was $1.48 million plus 10% (subject to
adjustment by the Federal Reserve Board between 8% and 14%) against that portion
of total transaction accounts in excess of $49.3 million. The first $4.4 million
of otherwise reservable balances (subject to adjustments by the Federal Reserve
Board) were exempted from the reserve requirements. The Bank maintained
compliance with the foregoing requirements. For 1998, the Federal Reserve Board
has decreased from $49.3 to $47.8 million the amount of transaction accounts
subject to the 3% reserve requirement and to increase the amount of exempt
reservable balances from $4.4 million to $4.7 million. The balances maintained
to meet the reserve requirements imposed by the Federal Reserve Board may be
used to satisfy liquidity requirements imposed by the OTS.

HOLDING COMPANY REGULATION

         The Company is a nondiversified unitary savings and loan holding
company within the meaning of the HOLA. As a unitary savings and loan holding
company, the Company generally is not restricted under existing laws as to the
types of business activities in which it may engage, provided that the Bank
continues to be a qualified thrift lender ("QTL") for purposes of the federal
regulations. Upon any non-supervisory acquisition by the Company of another
savings association as a separate subsidiary, the Company would become a
multiple savings and loan holding company and would be subject to extensive
limitations on the types of business activities in which it could engage. The
HOLA limits the activities of a multiple savings and loan holding company and
its non-insured institution subsidiaries primarily to activities permissible for
bank holding companies under Section 4(c)(8) of the Bank Holding Company Act
("BHC Act"), subject to the prior approval of the OTS, and to other activities
authorized by OTS regulation. Multiple savings and loan holding companies are
prohibited from acquiring or retaining, with certain exceptions, more than 5% of
a non-subsidiary holding company, or a non-subsidiary company engaged in
activities other than those permitted by the HOLA. Recently proposed legislation
would treat all savings and loan holding companies

                                       27

<PAGE>



as bank holding companies and would limit the activities of such companies to
those permissible for bank holding companies.

         The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings institution or holding company thereof, or
from acquiring such an institution or company by merger, consolidation or
purchase of its assets, without prior written approval of the OTS or acquiring
or retaining control of a depository institution that is not insured by the
FDIC. In evaluating applications by holding companies to acquire savings
institutions, the OTS must consider the financial and managerial resources and
future prospects of the company and institution involved, the effect of the
acquisition on the risk to the insurance funds, the convenience and needs of the
community and competitive factors.

         The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, except: (i) interstate supervisory acquisitions by
savings and loan holding companies and (ii) the acquisition of a savings
institution in another state if the laws of the state of the target savings
institution specifically permit such acquisitions. The states vary in the extent
to which they permit interstate savings and loan holding company acquisitions.

         In order to elect and continue to be regulated as a savings and loan
holding company by the OTS (rather than as a bank holding company by the Federal
Reserve Board), the Bank must continue to qualify as a QTL. In order to qualify
as a QTL, the Bank must maintain compliance with a Qualified Thrift Lender Test
("QTL Test"). Under the QTL Test, a savings institution is required to maintain
at least 65% of its "portfolio assets" (total assets less: (i) specified liquid
assets up to 20% of total assets; (ii) intangibles, including goodwill; and
(iii) the value of property used to conduct business) in certain "qualified
thrift investments" (primarily residential mortgages and related investments,
including certain mortgage-backed and related securities) in at least 9 months
out of each 12 month period. A holding company of a savings institution that
fails the QTL Test must either convert to a bank holding company and thereby
become subject to the regulation and supervision of the Federal Reserve Board,
or operate under certain restrictions. As of December 31, 1997, the Bank
maintained in excess of 85% of its portfolio assets in qualified thrift
investments. The Bank also met the QTL Test in each of the prior 12 months and,
therefore, met the QTL Test. Recent legislative amendments have broadened the
scope of "qualified thrift investments" that go toward meeting the QTL Test to
fully include credit card loans, student loans and small business loans. A
savings association may also satisfy the QTL Test by qualifying as a "domestic
building and loan association" as defined in the Internal Revenue Code of 1986
(the "Code").

                           FEDERAL AND STATE TAXATION

FEDERAL TAXATION

         GENERAL. The Company and the Bank report their income on a consolidated
basis using the accrual method of accounting, and are subject to federal income
taxation in the same manner as other corporations with some exceptions,
including particularly the Bank's reserve for bad debts discussed below. The
following discussion of tax matters is intended only as a summary and does not
purport to be a comprehensive description of the tax rules applicable to the
Bank or the Company. The Bank has not been audited by the IRS during the past
five years. For its 1997 taxable year, the Bank is subject to a maximum federal
income tax rate of 34%.


                                       28

<PAGE>



         BAD DEBT RESERVES. For fiscal years beginning prior to December 31,
1995, thrift institutions which qualified under certain definitional tests and
other conditions of the Internal Revenue Code of 1986 (the "Code") were
permitted to use certain favorable provisions to calculate their deductions from
taxable income for annual additions to their bad debt reserve. A reserve could
be established for bad debts on qualifying real property loans (generally
secured by interests in real property improved or to be improved) under (i) the
Percentage of Taxable Income Method (the "PTI Method") or (ii) the Experience
Method. The reserve for nonqualifying loans was computed using the Experience
Method.

         The Small Business Job Protection Act of 1996 (the "1996 Act"), which
was enacted on August 20, 1996, requires savings institutions to recapture
(i.e., take into income) certain portions of their accumulated bad debt
reserves. The 1996 Act repeals the reserve method of accounting for bad debts
effective for tax years beginning after 1995. Thrift institutions that would be
treated as small banks are allowed to utilize the Experience Method applicable
to such institutions, while thrift institutions that are treated as large banks
(those generally exceeding $500 million in assets) are required to use only the
specific charge-off method. Thus, the PTI Method of accounting for bad debts is
no longer available for any financial institution.

         A thrift institution required to change its method of computing
reserves for bad debts will treat such change as a change in method of
accounting, initiated by the taxpayer, and having been made with the consent of
the IRS. Any Section 481(a) adjustment required to be taken into income with
respect to such change generally will be taken into income ratably over a
six-taxable year period, beginning with the first taxable year beginning after
1995, subject to the residential loan requirement.

         Under the residential loan requirement provision, the recapture
required by the 1996 Act will be suspended for each of two successive taxable
years, beginning with the Bank's current taxable year, in which the Bank
originates a minimum of certain residential loans based upon the average of the
principal amounts of such loans made by the Bank during its six taxable years
preceding its current taxable year.

         Under the 1996 Act, for its current and future taxable years, the Bank
is permitted to make additions to its tax bad debt reserves. In addition, the
Bank is required to pay over a six year period the excess of the balance of its
tax bad debt reserves as of December 31, 1995 over the balance of such reserves
as of December 31, 1987. As a result of such recapture, the Bank will incur
additional tax payments of approximately $82,000 which is generally expected to
be taken into income beginning in 1998 over a six year period.

         DISTRIBUTIONS. Under the 1996 Act, if the Bank makes "non-dividend
distributions" to the Company, such distributions will be considered to have
been made from the Bank's unrecaptured tax bad debt reserves (including the
balance of its reserves as of December 31, 1987) to the extent thereof, and then
from the Bank's supplemental reserve for losses on loans, to the extent thereof,
and an amount based on the amount distributed (but not in excess of the amount
of such reserves) will be included in the Bank's income. Non- dividend
distributions include distributions in excess of the Bank's current and
accumulated earnings and profits, as calculated for federal income tax purposes,
distributions in redemption of stock, and distributions in partial or complete
liquidation. Dividends paid out of the Bank's current or accumulated earnings
and profits will not be so included in the Bank's income.

         The amount of additional taxable income triggered by a non-dividend is
an amount that, when reduced by the tax attributable to the income, is equal to
the amount of the distribution. Thus, if the Bank makes a non-dividend
distribution to the Company, approximately one and one-half times the amount of
such distribution (but not in excess of the amount of such reserves) would be
includable in income for federal

                                       29

<PAGE>



income tax purposes, assuming a 35% federal corporate income tax rate. The Bank
does not intend to pay dividends that would result in a recapture of any portion
of its bad debt reserves.

         CORPORATE ALTERNATIVE MINIMUM TAX. The Code imposes a tax on
alternative minimum taxable income ("AMTI") at a rate of 20%. The excess of the
bad debt reserve deduction using the percentage of taxable income method over
the deduction that would have been allowable under the experience method is
treated as a preference item for purposes of computing the AMTI. Only 90% of
AMTI can be offset by net operating loss carryovers of which the Bank currently
has none. AMTI is increased by an amount equal to 75% of the amount by which the
Bank's adjusted current earnings exceeds its AMTI (determined without regard to
this preference and prior to reduction for net operating losses). In addition,
for taxable years beginning after December 31, 1986 and before January 1, 1996,
an environmental tax of .12% of the excess of AMTI (with certain modifications)
over $2.0 million is imposed on corporations, including the Bank, whether or not
an Alternative Minimum Tax ("AMT") is paid. The Bank does not expect to be
subject to the AMT, but may be subject to the environmental tax liability.

         DIVIDENDS RECEIVED DEDUCTION AND OTHER MATTERS. The Company may exclude
from its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Company and the Bank will not file a consolidated tax return,
except that if the Company or the Bank own more than 20% of the stock of a
corporation distributing a dividend then 80% of any dividends received may be
deducted.

         SAIF RECAPITALIZATION ASSESSMENT. The Funds Act levied a 65.7-cent fee
on every $100 of thrift deposits held on March 31, 1995. For financial statement
purposes, this assessment was reported as an expense for the quarter ended
September 30, 1996. The Funds Act includes a provision which states that the
amount of any special assessment paid to capitalize the SAIF under this
legislation is deductible under Section 162 of the Code in the year of payment.

OHIO TAXATION

         The Company is subject to the Ohio corporation franchise tax, which, as
applied to the Company, is a tax measured by both net earnings and net worth.
The rate of tax is the greater of (i) 5.1% on the first $50,000 of computed Ohio
taxable income and 8.9% of computed Ohio taxable income in excess of $50,000 or
(ii) 0.582% times taxable net worth.

         In computing its tax under the net worth method, the Company may
exclude 100% of its investment in the capital stock of the Bank after the
Conversion, as reflected on the balance sheet of the Company, in computing its
taxable net worth as long as it owns at least 25% of the issued and outstanding
capital stock of the Bank. The calculation of the exclusion from net worth is
based on the ratio of the excludable investment (net of any appreciation or
goodwill included in such investment) to total assets multiplied by the net
value of the stock. As a holding company, the Company may be entitled to various
other deductions in computing taxable net worth that are not generally available
to operating companies.

         A special litter tax is also applicable to all corporations, including
the Company, subject to the Ohio corporation franchise tax other than "financial
institutions." If the franchise tax is paid on the net income basis, the litter
tax is equal to .11% of the first $50,000 of computed Ohio taxable income and
 .22% of computed Ohio taxable income in excess of $50,000. If the franchise tax
is paid on the net worth basis, the litter tax is equal to .014% times taxable
net worth.

                                       30

<PAGE>



         The Bank is a "financial institution" for State of Ohio tax purposes.
As such, it is subject to the Ohio corporate franchise tax on "financial
institutions," which is imposed annually at a rate of 1.5% of the Bank's book
net worth determined in accordance with GAAP. As a "financial institution," the
Bank is not subject to any tax based upon net income or net profits imposed by
the State of Ohio.

IMPACT OF NEW ACCOUNTING STANDARDS

         The following does not constitute a comprehensive summary of all
material changes or developments affecting the manner in which the Company keeps
its books and records and performs its financial accounting responsibilities. It
is intended only as a summary of some of the recent pronouncements made by the
FASB which are of particular interest to financial institutions.

         In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation." This statement establishes accounting and reporting
standards for stock-based employee compensation plans including stock options
The statement defines a "fair value based method" for employee stock options and
encourages all entities to adopt that method for such options. However, it
allows an entity to continue to measure compensation cost for those plans using
the "intrinsic value based method" of accounting prescribed by APB Opinion No.
25. Entities electing to remain with the accounting in Opinion 25 must make
proforma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in this statement had been applied. This standard
was adopted in 1997 when the Company granted stock options.

         In June 1996, the FASB issued SFAS No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" which
established accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. The standards are based on
a consistent application of a financial components approach that focuses on
control. Under that approach, after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and the liabilities it
has incurred, derecognizes financial assets when control has been surrendered,
and derecognizes liabilities when extinguished. SFAS No. 125 supersedes SFAS No.
122. SFAS No. 125 is effective for transactions occurring after December 31,
1997. There was no impact from the adoption of this standard in 1997.

         In February 1997, the FASB released SFAS No. 128, "Earnings Per Share"
("SFAS No. 128"). SFAS No. 128 establishes standards for computing and
presenting earnings per share ("EPS") and applies to entities with publicly held
common stock or potential common stock. SFAS No. 128 simplifies the standards
for computing earnings per share previously found in APB Opinion No. 15,
"Earnings Per Share," and makes them comparable to international EPS standards.
It replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
numerator and denominator of the diluted EPS computation. Basic EPS excludes
dilution and is computed by dividing income available to common stockholders by
the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB
Opinion No. 15. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods; earlier
application is not permitted.

         In March 1997, the FASB issued SFAS No. 129, "Disclosure of Information
About Capital Structure" ("SFAS No. 129"). SFAS No. 129 continues the existing
requirements to disclose the pertinent rights and privileges of all securities
other than ordinary common stock but expands the number of companies subject to
portions of its requirements. Specifically, the Statement requires all entities
to provide

                                       31

<PAGE>



the capital structure disclosures previously required by APB Opinion No. 15.
Companies that were exempt from the provisions of APB Opinion No. 15 will now
need to make those disclosures.

         In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components (revenues, expenses, gains,
and losses) in a full set of general purpose financial statements. SFAS No. 130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement, and (b) display
the accumulated balance of other comprehensive income separately from net worth
and additional paid-in capital in the equity section of a statement of financial
position. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997. Reclassification of financial statements for earlier periods provided
for comparative purposes is required. Management is in the process of
determining the impact, if any, this statement will have on the Bank.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131
requires disclosures for each segment that are similar to those required under
current standards with the addition of quarterly disclosure requirements and a
finer partitioning of geographic disclosures. It requires limited segment data
on a quarterly basis. It also requires geographic data by country, as opposed to
broader geographic regions as permitted under current standards. SFAS No. 131 is
effective for fiscal year beginning after December 15, 1997 with earlier
application permitted.

RECENT DEVELOPMENT

         The Company has conducted a review of its computer systems to identify
the systems that could be affected by the "Year 2000" issue and is developing an
implementation plan to resolve the issue. The year 2000 problem is the result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations.

         The Company expects its year 2000 date conversion project to be
completed on a timely basis. During the execution of this project the Company
will incur internal staff costs as well as consulting and other expenses related
to enhancements necessary to prepare the systems for the year 2000. The expense
of the year 2000 project as well as the related potential effect on the
Company's earnings is not expected to have a material effect on its financial
position or results of operations.


                                       32

<PAGE>



ADDITIONAL ITEM.  EXECUTIVE OFFICERS OF THE REGISTRANT.

         The following table sets forth certain information regarding the
executive officers of the Company and the Bank who are not also directors.

<TABLE>
<CAPTION>
                           Age at           Position with the Company and Bank
Name                       12/31/97         and Past Five Years Experience
----                       --------         ----------------------------------
<S><C>
Michael P. Cooper            40             Chief Financial Officer and Treasurer of the Company and the
                                            Bank.  Prior to joining the Company in 1997, Mr. Cooper was
                                            Comptroller of a property management/personnel service and
                                            dental insurer.  From 1987-1994, Mr. Cooper was Chief Financial
                                            Officer of Guardian Savings Bank.

Diane P. Irwin               42             Vice President, Chief Operating Officer and Secretary of the
                                            Company and the Bank.
</TABLE>


                                       33

<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTIES.

         The Company and the Bank are located and conduct their business at the
Bank's main office located at 5255 Beech Street, St. Bernard, Ohio, and at a
branch on Erie Avenue in Cincinnati. The Company believes that the Bank's
current facilities are adequate to meet the present and immediately foreseeable
needs of the Bank and the Company. In prior years, the Bank has not been
required to pay rent for the office that the Bank has operated from. In 1995,
the lessor negotiated for lease payments through December 31, 1999 totalling
$105,000. The lease payments will be lower in the first years and increase in
later years to cover the total amount of the lease. There are no renewal
options, and the Bank may need to renegotiate at the end of the term. The
following table sets forth certain information relating to the Bank's office.

<TABLE>
<CAPTION>
                                                          ORIGINAL                            NET BOOK VALUE
                                                            DATE                              OF PROPERTY OR
                                             LEASED        LEASED          DATE OF              LEASEHOLD
                                               OR            OR             LEASE            IMPROVEMENTS AT
                LOCATION                     OWNED        ACQUIRED        EXPIRATION        DECEMBER 31, 1996
----------------------------------------   ----------   -------------   --------------   ------------------------
<S><C>
5255 Beech Street
St. Bernard, Ohio  45217................    Leased            1995             2000           $240,000
3521 Erie Avenue
Cincinnati, Ohio  45208.................     Owned            1997               --           $358,000
</TABLE>

         In addition, at December 31, 1997 the Bank had a capitalized lease
obligation related to 3 of its ATMs. See Note 6 to the Notes to Financial
Statements appearing elsewhere in this Form 10-KSB. At December 31, 1996, the
Bank had a total of 3 ATMs. The Bank is currently in the process of
renegotiating the agreements it has with Procter & Gamble relating to the ATMs
located at Procter & Gamble facilities. The Bank expects that as the agreements
are renegotiated, it will either reduce the costs borne by the Bank related to
the continuing operation of the ATMs or eliminate them.

         For further information related to the Bank's properties, see Note 4 to
the Notes to the Financial Statements included in the Company's 1997 Annual
Report to Stockholders.

ITEM 3.  LEGAL PROCEEDINGS.

         Neither the Company nor its subsidiaries are involved in any pending
legal proceedings, other than routine legal matters occurring in the ordinary
course of business, which in the aggregate involve amounts which are believed by
management to be immaterial to the consolidated financial condition or results
of operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.


                                       34

<PAGE>



                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Information relating to the market for Registrant's common equity and
related stockholder matters appears in the Registrant's 1997 Annual Report to
Stockholders on the back inside cover. On December 31, 1997, the Company had 235
registered shareholders. The Company began paying quarterly dividends in fiscal
1997 of $.05 per share per quarter and most recently declared a dividend of $.05
per share payable on April 1 to all holders of record on March 15, 1998. See
also Note 10 to the Notes to the Company's financial statements. The Company
repurchased a total of 17,337 shares of its common stock in fiscal 1997.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         The above-captioned information appears under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in the
Registrant's 1997 Annual Report to Stockholders on pages 4 through 13 and is
incorporated herein by reference.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Consolidated Financial Statements of Lenox Bancorp, Inc. and its
subsidiary, together with the report thereon by Clark, Schaefer, Hackett & Co.
appear in the Registrant's 1997 Annual Report to Stockholders on pages 14
through 49 and are incorporated herein by reference.

ITEM 8.  CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None.


                                       35

<PAGE>



                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information relating to Directors and Executive Officers of the
Registrant is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 8, 1998, on
pages 4 through 6. Information concerning Executive Officers who are not
directors is contained in Part I of this report pursuant to paragraph (b) of
Item 401 of Regulation S-K in reliance on Instruction G.

ITEM 10.  EXECUTIVE COMPENSATION.

         The information relating to director and executive compensation is
incorporated herein by reference to the Registrant's Proxy Statement for the
Annual Meeting of Stockholders to be held on April 8, 1998, on pages 8 through
13.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information relating to security ownership of certain beneficial
owners and management is incorporated herein by reference to the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on April 8,
1998, on pages 3 and 5 through 6.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information relating to certain relationships and related
transactions is incorporated herein by reference to the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on April 8, 1998, on
page 13.


                                       36

<PAGE>


                                    PART IV

ITEM 13.  EXHIBITS.

(a)   The following documents are filed as a part of this report:

(1)   Consolidated Financial Statements of the Company are incorporated by
      reference to the following indicated pages of the 1997 Annual Report to
      Stockholders.

                                                                           PAGE
      Independent Auditors' Report.....................................     14

      Consolidated Balance Sheet
      as of December 31, 1997 and 1996.................................    15-16

      Consolidated Statement of Income
      for the Two Years Ended December 31, 1997........................     17

      Consolidated Statement of Changes in
      Stockholders' Equity for Two Years Ended
      December 31, 1997................................................     18

      Consolidated Statement of Cash Flows for
      the Two Years Ended December 31, 1997............................    19-20


      Notes to Consolidated Financial Statements.......................    21-49



                                       37

<PAGE>


The remaining information appearing in the 1997 Annual Report to Stockholders is
not deemed to be filed as part of this report, except as expressly provided
herein.

(2)   Exhibits

      (a)  The following exhibits are filed as part of this report:

            3.1   Amended Articles of Incorporation of Lenox Bancorp, Inc.
                  (filed herewith)
            3.2   Amended and Restated Code of Regulations of Lenox Bancorp,
                  Inc. (filed herewith)
            4.0   Stock Certificate of Lenox Bancorp, Inc.*
           10.1   Form of Employment Agreement between the Company and Virginia
                  M. Porowski*
           10.2   Form of Employment Agreement between the Bank and
                  Virginia M. Porowski*
           10.3   Lenox Bancorp, Inc. Incentive Plan**
           13.0   1997 Annual Report to Stockholders (filed herewith)
           21.0   Subsidiary information is incorporated herein by reference to
                  "Item 1 - General"
           27.0   Financial Data Schedule (filed herewith)

      (b)  Reports on Form 8-K
           None

---------
*     Incorporated herein by reference to the Exhibits to Form S-1, Registration
      Statement, and Pre-Effective Amendment No. 1, filed on August 25, 1995 and
      March 8, 1996, respectively, Registration No. 33-96248.
**    Incorporated herein by reference to the Proxy Statement for the 1997
      Annual Meeting of Stockholders previously filed with the Commissioner.


                                       38

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                 LENOX BANCORP, INC.


                                 By: /s/ Virginia M. Porowski
                                 _______________________________________________
                                 Virginia M. Porowski
Dated:  March 25, 1998           President, Chief Executive Officer and Director


         Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
         Name                                        Title                                    Date
         ----                                        -----                                    ----
<S><C>
/s/ Virginia M. Porowski                  President, Chief Executive Officer              March 25, 1998
___________________________               and Director
Virginia M. Porowski                      (principal executive officer)


/s/ Michael P. Cooper                     Chief Financial Officer and Treasurer           March 25, 1998
___________________________               (principal financial and accounting officer)
Michael P. Cooper


/s/ Gail R. Behymer                       Director                                        March 25, 1998
___________________________
Gail R. Behymer


/s/ Richard C. Harmeyer                   Chairman of the Board                           March 25, 1998
___________________________
Richard C. Harmeyer


/s/ Robert R. Keller                      Director                                        March 25, 1998
___________________________
Robert R. Keller


/s/ William P. Riekert, Jr.               Director and Assistant Secretary                March 25, 1998
___________________________
William P. Riekert, Jr.


/s/ Henry E. Brown                        Director                                        March 25, 1998
___________________________
Henry E. Brown


/s/ Curtis L. Jackson                     Director                                        March 25, 1998
___________________________
Curtis L. Jackson


/s/ Reba St. Clair                        Director                                        March 25, 1998
___________________________
Reba St. Clair
</TABLE>